USA Today
WASHINGTON (AP) — Sales of new homes soared in March by the largest amount in 13 years, reflecting a rebound from bad weather in February. But the median price of the homes sold last month actually declined, providing evidence that the nation’s five-year housing boom is slowing.
The Commerce Department reported that sales of new single-family homes rose 13.8% last month to a seasonally adjusted annual sales rate of 1.213 million units. The increase represented a recovery from a 10.9% plunge in sales in February.
But the median price of homes sold in March dropped to $224,200, down 2.2% from what homes were selling for in March 2005. It marked the first time home prices dropped over a 12-month period since December 2003.
The median price, the point where half the homes sold for more and half for less, also showed a decline in March when compared to February, falling 6.5%.
Home prices last year soared as anxious buyers bid more to get into a sizzling home market. However, analysts believe that sales, which set records for five straight years, will decline in 2006 as the housing boom cools under the impact of rising mortgage rates.
Home sales were up in all areas of the country led by a 35.7% surge in the West. Sales rose 10.9% in the Midwest, 6.9% in the South and 4.7% in the Northeast.
“This is probably going to keep the Fed concerned about inflation. If the housing market is still healthy, policymakers will probably continue to raise interest rates,” said Gary Thayer, chief economist for A.G. Edwards & Sons in St. Louis.
The strong new-home sales pace comes after a trade association report Tuesday that showed existing home sales picked up 0.3% in March, defying expectations for a slowdown, as buying rose in less-expensive markets and warm weather encouraged buyers.